Saturday, June 2, 2012

Four NFL teams gained salary cap room today as their "post-June 1" releases finally became official. Although the players had been released weeks ago, the scheduled salary cap numbers for Terence Newman (Dallas), Travelle Wharton (Carolina), Gary Brackett (Indianapolis) and Kevin Boss (Oakland) remained in full on those teams' caps until today. Now, their contracts are treated as if they were released today — their 2012 bonus prorations remain against this year's cap, and all future prorations accelerate into 2013 instead of this year.

Each of these players still counted as part of his team's Top 51 until today. That means that when those players' releases became official, they were each replaced by another player in their team’s Top 51. So, the net gain in cap room for each team is not simply equal to the reduction in the released player's cap charge, because another player's base salary begins counting against the team's cap.

Here's how the cap savings breaks down for each team, along with the dead money charges in 2012 and 2013 for each player:

DALLAS COWBOYS

Terence Newman’s cap charge goes from $8.016 million to $2 million for 2012, with $2 million in dead money left in 2013. Newman is replaced in Dallas’ Top 51 by a player whose base salary is $465,000, giving the Cowboys a net gain of $5.551 million in cap room. That puts Dallas $7,595,361 under the cap.

CAROLINA PANTHERS

Travelle Wharton’s cap charge goes from $7,562,882 to $1,862,882, with $1,862,882 in dead money left in 2013. Wharton is replaced in Carolina’s Top 51 by a player whose base salary is $540,000, so the Panthers have a net gain of $5.16 million in cap room and are now $8,383,625 under the cap.

INDIANAPOLIS COLTS

Gary Brackett’s cap charge drops from $7.4 million to $2.4 million, with $4.8 million in dead money for 2013. Brackett is replaced in the Colts’ Top 51 by rookie Josh Chapman, whose base salary is $390,000, giving the Colts a net gain of $4.61 million in cap room. Indianapolis is now $14,953,698 under the cap.

OAKLAND RAIDERS

Kevin Boss’s cap charge goes from $4.75 million to $750,000, with $1.5 million in dead money in 2013. Boss is replaced in Oakland’s Top 51 by a player whose base salary is $465,000, so the Raiders’ net gain is $3.535 million in cap room. They are now $3,581,346 under the cap.

Wednesday, May 2, 2012

A lot of people, including many in the media, have a misunderstanding
of how the NFL salary cap and rookie pool are intertwined, beyond the
misnomer of "a cap within a cap." This post is an attempt to explain
exactly how the rookie pool works and how it relates to the cap. (Note:
This post is a rewrite of a 2009 post, with all information updated to apply to 2012.)

First, a couple of definitions:

Top 51 Rule:
This is explained in Article 13, Section 6, subsection (a)(i) of the
Collective Bargaining Agreement. The rule states, "between the start of
the League Year and the first day of the regular playing season, only
the following amounts from Paragraph 5 shall be included for players
whose Player Contracts are not among the Team’s 51 highest valued Player
Contracts, tenders and Offer Sheets (as determined under this Section
6): (1) Any amount that exceeds the Minimum Active/Inactive List Salary
for Undrafted Rookie Free Agents; and (2) Any amount that exceeds twice
the applicable Minimum Active/Inactive List Salary for all other
players."

In simple terms, it means that during the
offseason, for any player whose cap number is not among his team's 51
highest cap numbers, his base salary ("Paragraph 5" salary) does not
count against the cap. The two exceptions listed above ("any amount that
exceeds ...") are not known to have ever come into play, because teams
traditionally give undrafted rookies minimum base salaries, and it would
be extremely unlikely for a team to have a player outside its Top 51
with a base salary more than twice his applicable minimum.

As
an example of how the Top 51 Rule works, consider a team whose
51st-highest cap number for current players (contracts, tenders or offer
sheets) is $480,580. The team's next-highest cap number is $475,580,
which is for a second-year player with a base salary of $465,000, a
signing bonus proration of $5,000 and a standard workout bonus of
$5,580. Because this player is outside the hypothetical team's Top 51,
his minimum base salary does not count against the cap, but the other
$10,580 does. The same thing would apply to the rest of the team's
players outside its Top 51: their minimum base salaries would not count
against the cap, but everything else would. (All "dead money" also
counts against the cap.)

Rookie pool: On a
league-wide basis, the rookie pool (described in Article 7 of the CBA)
is the total amount of money that can be spent on all rookies, except
that the minimum base salaries for undrafted rookies do not count toward
the rookie pool. Each team's rookie pool is its portion of the
league-wide total and is determined by the number, round and position of
the draft choices it uses, plus one-third of the annual limit for
signing bonuses given to undrafted rookies. (One-third of the total
represents the first-year proration of bonuses on their three-year
contracts.)

Basically, the entire first-year cap
numbers for all of a team's draft choices must fit into its rookie pool,
along with any first-year cap charges for undrafted rookies other than
their minimum base salaries. When a team signs a drafted player, his
first-year cap number does not have to be equal, or even close to, the
rookie pool value of the pick used to select him, as long as the team's
combined rookie pool charges for all of its rookies don't exceed its
limit.

(NOTE: The 2012 team rookie pool figures that have been reported do not include the undrafted rookie reservation, which is one-third of $76,585 for each team. That means that each team's true rookie pool, as defined by the CBA, is $25,528 higher than the reported figure. Post updated May 13, 2012)

How it all works

Saying
that the rookie pool is "a cap within a cap" is a bit of a misnomer
because the rookie pool actually is a separate accounting from the
salary cap, although rookies count toward both limits. The calculations
are different, though, so the amount a rookie counts against the rookie
pool isn't necessarily the same as the amount he counts against the
salary cap.

When a player is drafted, he automatically
is tendered a one-year contract for the rookie minimum base salary (for
2012, that is $390,000). This amount immediately is applied to the
team's rookie pool and salary cap. Because most teams have at least 51
players with cap numbers higher than the rookie minimum salary before
the draft, the automatic tenders for drafted players won't affect those
teams' caps at all. It sometimes is mistakenly reported that teams must
have cap room in order to use their draft choices, but that applies only
to teams that have fewer than 51 players signed or tendered at the time
of the draft. And even then, it applies only to the number of draft
choices a team uses until it has 51 players signed or tendered. So, for
example, if a team had 49 players signed or tendered before the draft,
it would need only $780,000 of cap room in order to make all of its
selections. After the first two draftees are automatically tendered, the
team would have 51 players signed or tendered, and the rest of the
team's draftees would fall outside its 51 highest cap numbers and would
not affect its cap.

When a drafted player signs his
contract, the team is charged against its salary cap according to the
Top 51 Rule, and it is charged against its rookie pool according to the
rules in Article 7.

Let's consider a seventh-round
draft pick who signs a four-year contract with minimum base salaries and
a $44,000 signing bonus and who was selected by a team with its
51st-highest cap number being $480,000 (for a second-year player with a
$465,000 base salary). The rookie's first-year cap number would be
$401,000, consisting of his $390,000 base salary and his $11,000 bonus
proration. Because he was drafted, the entire $401,000 would count
against his team's rookie pool, replacing his automatic tender. But
because he is below his team's top 51 cap numbers, only his $11,000
bonus proration counts against the salary cap during the offseason.

Now
consider a third-round draft pick for the same team. He signs a
four-year contract with minimum base salaries and a signing bonus of
$700,000. His first-year cap number would be $565,000, consisting of his
$310,000 base salary and his $175,000 bonus proration. All $565,000
would count against his team's rookie pool and against his team's salary
cap. However, by assuming his place among the team's top 51 cap
numbers, he knocks the player with a $480,000 cap number ($465,000 base
salary) out of the team's top 51. For that player, his base salary no
longer counts against the cap, leaving only the other $15,000 counting
against the cap. The net result is that the team's cap room is reduced
by only $100,000 — the draftee's $565,000 is charged against the cap,
but the second-year player's $465,000 base salary no longer is.

As
you can see, as long as his team already has at least 51 players signed
or tendered, a draftee's effect on his team's salary cap is far less
than his rookie pool charge. Most people forget this when they consider
how much cap room must be "set aside" for rookies. You'll often see
people say that, for example, if a team has $4 million of cap room and a
rookie pool of $5 million, it will need to clear another $1 million
from its cap in order to sign all of its draft choices. Of course, if
the team already has close to or more than 51 players signed or
tendered, that's wrong, because that team's rookies will reduce its
salary cap by far less than $5 million, as shown above.

As
long as a team has at least 51 players already signed or tendered, it
is impossible for its entire rookie class to reduce its cap room by more
than its rookie pool minus the amount equal to the minimum rookie
salary times the number of draftees signed. For example, if a team with a
rookie pool of $5.9 million already has at least 51 players signed or
tendered, then signs all 10 of its draftees and any number of undrafted
rookies, it is impossible for the team's entire rookie class to reduce
its cap room by more than $2 million. That's because the $390,000 base
salary of every undrafted rookie and every draftee who doesn't make the
team's top 51 won't count against the cap, and every draftee who does
make the top 51 will knock another player's base salary of at least
$390,000 out of the top 51.

To determine the maximum
amount that a team's entire rookie class could reduce its cap room, it
is necessary to know how many players it has signed or tendered, how
many of its draftees are likely to have first-year cap numbers that
qualify for its top 51 and the cap numbers and base salaries for as many
players at the bottom of its top 51 as it has draftees who will qualify
for the top 51.

If all of that is not known, a
reasonable estimate for most teams this season can be made by starting
with each team's rookie pool, then subtracting $465,000 for each draft
pick in the first four rounds and $390,000 for each draft pick in the
fifth, sixth or seventh rounds. For example, a team with a rookie pool
of $5 million and one draft pick in each round will use approximately
$1.97 million of cap room to sign all of its rookies ($5 million, minus
the $1.86 million for the four players displaced in the team's top 51,
minus $1.17 million for the three late-round draftees whose base
salaries won't count against the cap). Using this method might not be
precise for every team, but it will provide a pretty good estimate.

Thursday, April 26, 2012

According to NFL.com, the 2012 Rookie Pool has not yet been determined. (UPDATE: NFL.com has now reported that the league and the NFLPA have reached an agreement on the 2012 Rookie Pool.) Previous reports have indicated that it might be less than in 2011, although the Collective Bargaining Agreement seems to indicate that it must increase by the same percentage as the salary cap. If so, it would rise by just 0.187 percent. These facts likely mean that the 2012 Rookie Pool will be very close to the 2011 Rookie Pool. Thus, it will be possible to project each team's rookie pool for 2012 based on the figures from 2011.

Below are the actual 2011 rookie pool values -- in other words, those players' 2011 cap numbers -- for each of the 2011 draft picks. When available, the 2011 rookie pool allocation number -- the number used by the NFL to set the team-by-team and league-wide limits -- has been included in parentheses. As this shows, many of the 2011 draft picks' rookie pool numbers exactly matched the allocation figure for their respective picks after the allocation numbers were revealed to the teams and agents for the first time. To project a team's 2012 Rookie Pool, these figures can be used for each of the team's draft picks, and $25,000 can be added for undrafted rookies' signing bonus prorations.